Plea Challenges Demand Of GST On Royalty Paid For Quarrying Of Building Stone: Karnataka High Court Grants Interim Relief

Advocate Kartik Seth appearing for the petitioner B&B Stones had approached the court challenging the imposition of GST on mining royalty on reverse charge basis. Seth had argued that mining royalty is a tax already and tax cannot be imposed on another tax.

The plea stated that the petitioner, a partnership firm, entered into a mining lease deed with the state of Karnataka on October 8, 2015 for quarrying of building stone. Vide notice dated August 18 2021, petitioner has been asked for auditing GST on mining royalty. The plea prays for quashing the impugned circular dated October 6, 2021 which led to levy of service tax. By way of interim relief it has sought for refund the amount of GST paid by the petitioner and stay the payment of GST on mining royalty.

A division bench of Chief Justice Ritu Raj Awasthi and Justice S R Krishna Kumar said,

"In addition to reiterating the various contentions urged in the petition, learned counsel for the petitioner invites our attention to several orders passed by the other High Courts as well as this Court, in particular, the order dated 25.01.2021 passed by the learned Single Judge of this Court in the case of Zeenath Transport Co. Vs. Principal Additional Director General, Directorate General of GST Intelligence, Bengaluru in order to contend that payment of service tax / GST on mining lease / Royalty are stayed."

It added, "The said submission of learned counsel for the petitioner is placed on record. List after Summer Vacation, 2022. Meanwhile, respondents are restrained from demanding and collecting GST or Royalty from the petitioner, till the next date of hearing."

The matter is likely to be listed for hearing next month.

Case Title: B AND B STONES VERSUS UNION OF INDIA

Case No: WP 1593/2022